New York Gov. Eliot Spitzer this week proposed imposing a tax on sales of illicit drugs, adopting a concept already in place in 29 other states, the New York Times reported Jan. 24.

Seeking to close a $4.4-billion budget gap, Spitzer proposed a commodity tax on drugs as part of a broader package of taxes and fees, perhaps hoping to emulate the success of states like North Carolina, which collected $11 million in taxes on illegal drugs and alcohol last year.

Spitzer estimated that a drug tax could raise $17 million annually for New York. The tax would be $3.50 per gram of marijuana and $200 per gram for other drugs, but paying the tax would not shield dealers from criminal prosecution on possession charges.

In other states, such laws have led to litigation, with some struck down for violating constitutional protections against self-incrimination. As a result, many state laws now say that taxes can be paid anonymously, and that taxpayers cannot be reported to police.

In North Carolina, a federal appeals court ruled that the states was violating double-jeopardy rules by effectively punishing drug dealers twice, first with jail time and then with high taxes. The North Carolina tax was subsequently amended, and the state has a special division within its Department of Revenue devoted to collecting drug taxes.

Since few dealers pay the tax up front, most of the collections come after dealers are arrested on criminal charges.